Why did India launched an investigation into Binance and Wazirx?
The India Financial Intelligence Unit (FIU-Ind) Survey the global cryptocurrency exchange and Indian exchange of Wazirx, focusing on potential gaps in cross-border transfers of digital assets.
The survey is motivated by concerns about unregulated portfolio transactions linked to Pakistan accounts. Authorities are particularly worried about activities close to sensitive areas such as Jammu-et-Cachemire, where such transfers could be used for illegal funding or money laundering. They also investigate the funds sent from India for addresses located outside the country.
Although no direct criminal connection has yet been found, a lack of transparency in the crypto wallets led the FIU-Ind and the Application Directorate (ED) to monitor the blockchain activities. The survey began due to unusual cryptocurrency transactions, in particular portfolio transfers to door holder.
These transfers, often made through private addresses not linked to regulated exchanges, are difficult to follow and do not follow standard report rules. The concerns about the financing of terrorism and separatist activities in the Indian Cashmere region have given the survey a more urgent tone.
The investigation has become more urgent due to geopolitical concerns. The authorities have noticed an increase in cryptographic activity between the accounts linked to Pakistan and the beneficiaries in sensitive border areas such as Jammu-et-Cachemire. These transactions raise significant national security problems due to the instability and history of illegal financial activities in the region.
Did you know? In 2019, Gerald Cotten, CEO of Quadrigacx Crypto Exchange, died in India, locating access to $ 190 million in customer funds. Investigators later revealed that Cotten had directed Quadriga as Ponzi style fraud, using customer funds for personal commerce and luxury spending, after saying that they were safe in cold wallets.
Binance and Wazirx: previous regulation and safety problems in India
Binance and Wazirx are faced with an increased regulatory examination while India strengthens its monitoring of cryptocurrency exchanges, thanks to concerns concerning money laundering and the financing of illegal activities through cross-border transfers of digital assets.
Binance, the largest crypto exchange in the world, has returned to the Indian market after solving compliance problems. In June 2024, he paid a fine of approximately 18.9 INR crores (worth 189 million dollars on July 21, 2024) for past violations and signed up for the CRF in August 2024. However, the emergency frozen certain bank accounts linked to the Indian Binance operations in the context of a continuous survey of cross -border portfolio transactions.
Wazirx has already been associated with Binance and is widely used for sending cross -border funds to India. The exchange was hacked by the Lazare group in July 2024, which stole approximately 235 million dollars, highlighting the weaknesses of its safety and knowing your client measures (KYC). A 72 -page affidavit deposited before a Singapore court affirms that Wazirx indirectly supported the transfers of TRX tokens (TRON) which would have been connected to the financing of the Islamic State.
The two exchanges were under the spotlight while the Indian authorities try to guarantee that cryptocurrency activities do not threaten financial integrity or national security.
How the regulation of cryptography has evolved in India and Pakistan
India and Pakistan have taken divergent paths but increasingly structured towards the regulation of cryptography. India has adopted a cautious approach, focusing on taxation measures and the fight against money laundering (LMA) in a framework that does not recognize crypto as a legal call for tenders. Pakistan has evolved towards the legalization of cryptographic trading and the establishment of a regulatory authority to attract foreign investments and modernize its financial system.
In March 2025, Pakistan created Pakistan Crypto Council, with Bilal Bin Saqib appointed head of the Council, while the co-founder of Binance, Changpeng Zhao, will be his strategic advisor.
On July 8, 2025, Pakistan introduced the order on virtual assets, creating Pakistan Virtual Assets Reguulatory Authority (PVARA) to manage licenses and surveillance. The PVARA will operate as an autonomous regulatory body. His responsibilities will include licenses, monitoring and supervision of virtual asset service providers. In addition, PVARA will ensure compliance with international standards, in particular those described by the Financial Action Task Force (FATF).
India, after having initially prohibited banks from supporting cryptocurrency in 2018, saw the Supreme Court raising the ban in 2020. Since March 2023, crypto exchanges in India have to register with FIU-inc, follow the LMA rules, make full KYC checks, maintain files and report suspicious activities. Cryptocurrency benefits are taxed at 30% with a 1% tax deducted at source (TDS), and the 2025 budget has introduced stricter tax disclosure.
Although a complete law of cryptography is still pending, India aligns with global standards, such as the crypto-west reporting framework (CARF), to improve transparency and surveillance.
Did you know? In April 2021, the Turkish Thodex suddenly interrupted exchanges and withdrawals. CEO Faruk Fatih Özer fled to Albania wearing a hard drive with $ 2 billion in crypto. Later, he was amazing 11,196 years in prison for fraud and other crimes.
Risks of cross -border transactions between India and Pakistan
Transfers of cross-border cryptocurrencies between India and Pakistan have significant risks due to different regulations, geopolitical tensions and lack of transparency in cryptographic wallets. These factors raise concerns about illegal financing and financial instability:
- Regulatory differences: Variable regulatory approaches create gaps that can be used for illicit transactions. The adoption by India of the Global Crypto-Active Reports (CARF) reflects efforts to improve tax compliance and financial surveillance.
- Risks of anonymity: Experts warn that unregulated private portfolios can be used to finance terrorism. Regulators now require suspect transaction reports for cryptographic mixers, privacy tools and floors, although some maintain that excessive regulations could hinder innovation.
- India-Pakistan tensions: The current jurisdictional disputes increase the examination of cryptographic transactions, in particular in Jammu-et-Cachemire, where fears of terrorism financing are high. The Jammu-et-Cachemire (SIA) State survey agency has carried out coordinated raids in Jammu, Doda and Kupwara, targeting a suspected network using cryptocurrency to finance militancy and cross-border radicalization efforts.
- Growing cybercrime: The cross-border cyber-species involving cryptocurrencies, mule accounts and telegram-based bank robots have been reported, leading to increased vigilance on cryptographic transactions. The Financial Action Task Force (FATF) has warned that terrorists are increasingly exploiting electronic commerce platforms, messaging applications and cryptocurrencies to finance extremist activities, citing terrorist attacks in Pulwama (2019) and Gorakhnath Temple (2022).
Did you know? By 2021, the carpet draws, when the founders of the exchange suddenly wrap investors, represented 37% of all Crypto-SCAM income (against only 1% the previous year). Thodex exceeded this category during the same period.
Global tendency to monitor cryptography
While governments around the world tighten cryptographic regulations, India and Pakistan adapt to a new era of transparency and responsibility in digital financing ecosystems.
India’s investigation into Binance and Wazirx reflect broader initiatives. The United States Ministry of Justice has disrupted three terrorist financing operations in crypto involving groups such as Hamas, the Al-Qassam, Al-Qaida brigades and the Islamic State, entering large quantities of digital money.
On the other hand, the US Congress has advanced engineering, anti-CBDC and clarity acts to ensure regulatory clarity. EU AMLA also recognizes the possibility of using crypto for money laundering and applies license measures to the regional scale.
Survey efforts on agencies in India reflect a global trend. States seek to balance innovation with financial integrity and to counter illicit money flows to limit illegal and anti-national activities.
